Problem Algo Estimated Net Realizable Value and Effects of Processing Further LO
Lipton Liquids produces three products by a joint production process. Raw materials are put into production in Department and at the end of processing in this department, three products appear. Alpha is sold at the splitoff point with no further processing. Beta and Gamma require further processing before they are sold. Beta is processed in Department and Gamma is processed in Department Lipton Liquids uses the estimated net realizable value method of allocating joint production costs.
No inventories were on hand at July the beginning of the quarter. No raw material was on hand at September All units on hand at September were fully complete as to processing. Following is a summary of costs and other data for the period ended September :
Required:
a Determine the following amounts for each product: estimated net realizable value used for allocating joint costs, joint costs allocated to each of the three products, cost of goods sold, and finished goods inventory costs, September
b Assume that the entire output of Alpha could be processed further at an additional cost of $ per unit and then sold for $ per unit. Compute the incremental income from further processing Alpha.
c Considering the results of part b should Lipton Liquids process Alpha further?
Complete this question by entering your answers in the tabs below.
Determine the following amounts for each product: estimated net realizable value used for allocating joint costs, joint costs allocated to each of the three products, cost of goods sold, and finished goods inventory costs, September Note: Round your percentages to decimal places ie Do not round other intermediate calculations. Round your final answers to the nearest whole dollar amounts.
